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Most of the continental US states that responded to an IHS
Markit survey are forging ahead with plans to employ the Trump
administration's rule to limit power plant releases of carbon
dioxide until they are directed otherwise.
But none of the affected states appear to be in a rush to submit
these plans before the 8 July 2022 deadline, even though they
expect President-elect Joe Biden to take steps to either rewrite or
withdraw the Affordable Clean Energy (ACE)
regulation. This is despite not knowing how Biden plans to undo the
rule, or how a federal appeals court will rule on challenges to
it.
Released in 2019, ACE replaced the Obama administration's more
stringent 2015 Clean Power Plan—which set the first carbon
dioxide limits for existing coal-fired power plants—with
standards based on a list of technologies that the US Environmental
Protection Agency (EPA) has identified for upgrading plant
equipment and improving operations. The ACE rule did not set a
numerical standard for power plants.
The exclusive survey found that this list of states includes
Maryland, Illinois, and Pennsylvania that are opposing the federal
regulation in the US Court of Appeals for the District of Columbia
Circuit, but also Texas, West Virginia, and Kentucky that are
backing it in court. It also includes states like Arizona that are
not involved in the lawsuit.
Except for Alaska and Hawaii, each of the 48 contiguous states
have an 8 July 2022 deadline to submit plans to EPA that spell out
how they intend to curb carbon dioxide releases from coal-fired
power plants. EPA said it would write separate regulations for
Hawaii and Alaska but has not taken any steps along those
lines.
Power plants were responsible for 1,706 million metric tons
(MMt) or 35%, of total carbon dioxide emitted in 2019 in the US,
according to IHS Markit data. Coal-fired power plants were
responsible for the lion's share of power plant carbon dioxide
emissions, totaling about 996 MMt during that period.
Once fully implemented, the ACE rule—by EPA's own
calculations—is expected to reduce carbon dioxide emissions by
less than 1%, mostly through making power plants more efficient.
The ACE rule did not impose any numerical binding limits in
contrast to the Clean Power Plan, which required a 30% cut in
carbon emissions.
The 2015 Obama administration rule would have achieved this
targeted cut in the nation's coal-fired fleet's emissions via fuel
switching to natural gas, shifting to renewables, co-firing with
biomass, and using interstate trading programs like the Regional
Greenhouse Gas Initiative (RGGI). However, market forces since 2009
have resulted in retirements of coal-fired power plants, due in
part to utilities switching to the much cheaper and relatively
cleaner natural gas.
Replacing ACE
During the runup to November's presidential election, Biden
declared he would make America a "clean energy superpower." Since
being elected, Biden has made climate change one of his
administration's top four priorities and pledged to generate
carbon-free electricity by 2035.
However, Biden has not explicitly called for rolling back the
ACE rule as he has for repealing weakened fuel economy
standards.
Even as he
announced the appointment of North Carolina Environment
Secretary Michael Regan to head EPA on 19 December, Biden stopped
short of saying exactly what he would do with the ACE rule.
"Transforming the American electricity sector to produce power
without carbon pollution will be the greatest spur to job creation
and economic competitiveness in the 21st Century, not to mention
the benefits to our health and our environment," Biden said,
reiterating a campaign pledge.
With coal-fired generation shuttering for the past decade and
retirements expected to continue independent of ACE, the overall
impact of the rule is expected to be limited, according to Patrick
Luckow, IHS Markit associate director for global power and
renewables.
More importantly, "it's a hard place for states to be, not
knowing what Biden will do with ACE," Luckow said.
Former EPA Acting General Counsel Kevin Minoli said there will
certainly be a lot of people who call for the "repeal" of the ACE
rule. "In most situations it makes little to no sense to do that by
repealing the regulations that are on the books and starting over
from scratch. Rather, using what is in existence as the starting
line will most often get you to the finish line of a final rule
much faster," said Minoli, who is currently a partner with the
Washington D.C. office of Alston & Bird LLP.
But Boston-based Clean Air Task Force, which is representing an
American Lung Association-led coalition of environmental groups
that filed the initial lawsuit against ACE in a federal court, said
the groups support replacement of the rule.
The current rule is unlawful and no more than "a life extension
program for coal in the guise of a climate plan," Conrad Schneider,
the task force's advocacy director, said.
Biden "has given every indication that his administration will
take early and strong steps on climate," Schneider said. "Because
fossil fuel-fired power plants are the most significant stationary
source of carbon dioxide, a bold rule limiting their greenhouse
gases must be a top priority."
Not waiting around
But, apparently, most states aren't waiting to see what will
happen.
IHS Markit conducted a survey in mid-December of all 50 states,
and of the 31 responses received, 18 states said they are working
on plans under ACE, but would adapt accordingly when they receive
direction from the Biden administration.
Indiana is forging ahead with writing a rule to implement its
ACE plan, which its Department of Environmental Management (IDEM)
said would take at least two years to complete. "This process is
ongoing, and IDEM is not in a position to predict what will happen
at the federal level prior to the plan submittal deadline," the
state said in an email.
The Indiana agency was unwilling to predict what would become of
ACE under a new federal administration. "If the rule is remanded or
replaced, there will be a public process to weigh potential options
for the control of carbon dioxide," IDEM spokeswoman Sarah Bonick
told lHS Markit.
Arizona, though not involved in the litigation, said three of
its major utilities—Arizona Public Service (100% clean energy
by 2050), Tucson Electric Power (70% renewable power for retail
customers by 2035), and Salt River Project (90% of carbon oxide
emitted by 2050)—have voluntarily agreed to cuts in their
carbon dioxide emissions.
EPA already has indicated in its regulation that it is expecting
California, Idaho, Maine, Rhode Island, and Vermont to submit
negative declarations, meaning these states don't have any
coal-fired power plants to which the rule applies. California,
Idaho, and Rhode Island reaffirmed this in emails to IHS Markit, as
did Alaska.
In addition, Oregon told IHS Markit it would not submit a plan.
New York State said it too expects to submit a negative declaration
because its last coal-fired power plant will cease operations at
the end of 2020. Likewise, Connecticut's Department of Energy and
Environment expects it will be submitting a negative declaration
because its last coal-fired power plant in Bridgeport is slated to
close by 1 July 2021.
New Jersey said it has exceeded the requirements for the ACE
rule, but Department of Environmental Protection spokesman Larry
Hajma stopped short of saying whether the state was continuing to
work on a plan or would submit a negative declaration. Hajma said
the state already has its own ambitious plan in place to reduce
power plant emissions.
Washington State didn't say whether it was writing a plan but
added that it isn't worried about ACE-related burdens as its only
coal-fired power plant is slated to close in 2025. Colorado said it
is working on its own regulations and isn't dependent on the
federal rule.
'Wait and see' approach
Thomas Lorenzen, a former Department of Justice attorney who is
now a partner with the Washington D.C. office of Crowell &
Moring LLP, said he wasn't surprised to learn that states are
working on their plans.
"After all, it is the rule on the books," Lorenzen said.
But, at least four states told IHS Markit they remain on the
fence. Maryland said it would take a "wait and see" approach about
ACE and the litigation to overturn it before expending time, energy
and resources on developing a plan.
"We have not started working on a plan for a lot of the reasons
you mentioned; mainly we don't think it makes sense to expend the
time and resources on a plan right now," Maryland Environment
Secretary Benjamin Grumbles told IHS Markit in an email.
Likewise, North Dakota Department of Environmental Quality's
David Stroh, who is overseeing the rule's implementation, said the
state was pausing its work on the plan until the future of the rule
becomes clearer.
North Dakota asked power plants in the state to respond to a
questionnaire about their emissions and technologies by February
2021, Stroh, a state agency's environmental engineer, said.
However, the state "anticipates the pending rule litigation or the
administration change to impact the current rule. Considering this
recent news, we have now told them to hold off on their responses,"
Stroh said.
Additionally, Stroh said: "Regardless of the ACE rule's future,
we are actively engaged with the power plants in North Dakota to
better understand their operations regarding greenhouse gas
emissions. We believe we are in a good position to address the
requirements of the current rule or any new rule."
Virginia's Department of Environmental Quality is evaluating its
options to comply with ACE, but said its own state law and its
participation in RGGI will help it reduce greenhouse gas emissions,
according to spokeswoman Irina Calos. Meanwhile Kentucky's Energy
and Environment Cabinet expressed uncertainty with federal
regulations though it said it would comply with the ACE rule and
submit a plan.
IHS Markit's Luckow said states can't go wrong with reviewing
data about the technologies that power plants are using and their
emissions profile.
No state is rushing though
Crowell & Moring's Lorenzen said he believed that major
coal-producing states or states that rely heavily on coal-fired
generation may try to get their plans approved before the Trump
administration leaves office.
That's not exactly how things are panning out though, according
to IHS Markit interviews following the survey.
According to EPA, only West Virginia, which was the
second-largest coal producing state in 2019, is doing so. The state
will be the first among the ACE-compliant states to submit a final
partial plan for its 807-MW Longview coal-fired plant in the next
few weeks. However, West Virginia Department of Environmental
Protection has indicated in a draft partial plan that it will
submit a complete plan for its remaining 18 plants by the due date
of 8 July 2022.
Wyoming, which the US Energy Information Administration (EIA)
ranks as the top coal-producing state, did not respond to the
survey. However, Pennsylvania and Kentucky, which are fourth- and
fifth-ranked in coal production, said they would respond by the
July 2022 ACE deadline with a complete plan for their coal-fired
power fleets.
Illinois, which the EIA ranks as the third-largest coal
producing state but is opposing the ACE rule in court, said it is
currently developing a plan for the rule after gathering a good
deal of information about emissions and technologies from 39
affected coal-fired power units.
"The Illinois EPA will do what is necessary to remain in a
position to submit a plan for the ACE rule, if and as necessary.
Illinois EPA is prepared to comply with any new proposals from the
Biden administration," agency spokeswoman Kim Biggs said.
Likewise, Louisiana, Texas, Utah, and Pennsylvania, which each
boast sizable coal-fired generating power plants, also told IHS
Markit they will submit their plans when due.
"Utah is not obligated to submit the designated facilities plan
for ACE until the summer of 2022. We will need that time to do the
appropriate technical analysis," Jared Mendenhall, a spokesman for
the Utah Department of Environmental Quality, said.
Likewise, Louisiana Department of Environmental Quality
spokesman Gregory Langley said the agency's air quality assessment
group is working on a plan for ACE. "I can't tell you what the
plan's elements are, as it is still in progress. We are working
with the electric generating units and expect to have the plan
ready by 2022 when it is due," Langley added.
Attorney Lorenzen said he expects most states, despite their
declarations, to wait on further clarity from the incoming
administration as it may expand the current list of candidate
technologies and approaches for power plants to use.
In contrast to the Obama rule, ACE bars the trading of carbon
dioxide credits and averaging carbon dioxide reductions across
coal-fired units and forbids states from including carbon-capture
and storage technologies as one of the approaches to limiting
emissions. The rule also won't allow utilities to co-fire biomass,
or woody pellets, to reduce their carbon footprint.
This is the result of the Trump EPA's narrow reading of Section
111(d) of the Clean Air Act, which underpins the ACE rule. The ACE
rule only permits electric utilities to limit carbon dioxide
emissions within the fencelines or boundaries of affected
coal-fired units.
Despite the limitations on electric utilities, a West
Virginia-led coalition of 20 states is backing ACE in the D.C.
Circuit against a petition filed initially by 23 states and eight
cities led by New York State. Nevada withdrew as a petitioner but
then intervened on behalf of the remaining challengers.
The coalition backing ACE for the most part involves states such
as West Virginia, Kentucky, Indiana and Texas that produce coal and
rely on coal-fired generation, and includes Alaska, which is exempt
from the regulation. In contrast, the coalition opposing the rule
includes Hawaii, which like Alaska is exempt, as well as
California, Rhode Island, Vermont, and Maine that have no
coal-fired power plants.
In addition to states, a number of groups representing
manufacturers and power plants as well as environmental groups also
are involved in the litigation.
The D.C. Circuit held oral arguments on the challenges to ACE in
October, and now all parties are awaiting the court's ruling, which
could be issued anytime this year.
Bring everyone to the table
Now that Biden has assembled his climate team with former EPA
Administrator Gina McCarthy, the architect of the Clean Power Plan,
as the White House climate coordinator alongside Regan as head of
EPA, observers expect action on power plant carbon emissions.
Biden's team is most likely to try and balance the needs of
states, tribal nations, industry, and environmental groups, as the
nation seeks to reduce carbon dioxide emissions, Alston &
Bird's Minoli said. "A future where one state imposes the most
restrictive regulations and the next state imposes none creates an
unlevel playing field on which people will be playing the same game
by different sets of rules," he added.
The Clean Air Task Force's Schneider sees states' efforts as
complementing any forthcoming federal regulation.
"Far from limiting EPA's actions, these efforts create the
opportunity for more comprehensive and efficient national power
sector regulations (and/or legislation) to realize greater carbon
reductions, harmonize these requirements, and create a level
playing field across the US," Schneider said.
Posted 12 January 2021 by Amena Saiyid, Senior Climate & Energy Research Analyst, IHS Markit